The recently-formed S&P BSE Bharat-22 index, which is set to track the share price movements of 22 blue-chip stocks to be divested by the government, has outperformed the benchmark BSE Sensex.

As of August-end, the Bharat-22 index has delivered a return of 14.51 per cent while the Sensex has given 12.98 per cent return. Similarly, when back tested for the last two-year return, Bharat-22 has given 16.33 per cent return on investment while it was 11.44 per cent for the Sensex. The government plans to raise funds by divesting its holdings of above 51 per cent in banks and Central Public Sector Enterprises to Bharat-22 ETF (exchange-traded fund). It will also include government stake in Axis Bank, L&T and ITC held through the Specified Undertaking of the Unit Trust of India. The ETF will be managed by ICICI Prudential AMC which has recently filed the draft prospectus on the ETF with SEBI.

S Naren, Executive Director, ICICI Prudential AMC, said investors can partake in a variety of stocks spanning six sectors — industrials, energy, utilities, finance, FMCG and basic materials — with an overweight on the former three. The index blends sectors with secular growth prospects (FMCG and utilities) and cyclicals (energy, metals, industrials). This will help reduce volatility and improve long-term investor returns, he said.

Once launched, Bharat-22 ETF will be traded on the stock exchange with large-cap stocks constituting 90 per cent while mid- and small-caps accounting for 8 per cent and 2 per cent, respectively.

Chintan Haria, Fund Manager and Head — Product Development and Strategy, ICICI Prudential AMC, said the key reforms of the government including financial inclusion, digital and cashless economy, GST, infrastructure spending, Make in India and direct benefit transfer of subsidy can enhance the earnings of the companies that form part of the index.

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